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Fitch: RRI Energy outlook stable
Fitch Ratings said it changed RRI Energy, Inc.'s outlook to stable from negative, affirmed its long- and short-term issuer default ratings at B, senior secured debt at BB/RR1 and senior unsecured debt at B+ and revised the recovery rating on the senior unsecured debt to RR3 from RR2.
The agency said the outlook revision reflects the company's balance sheet deleveraging and expected improvements in earnings and cash flow due in part to RRI's focus on hedging and securing capacity revenue at its fleet.
The ratings reflect the challenging competitive generation environment Fitch expects for 2010 and 2011 and the company's significant leverage and less-than-robust credit metrics, the agency said.
The ratings are supported by the company's strong liquidity position and an improved business risk profile following the sale of the retail electricity marketing businesses in 2009. Fitch said the working capital and collateral financing requirements of the retail business, along with its attendant margin volatility, had previously weighed heavily on the rating.
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